If this is a W124 E320 (i.e. up to M.Y. 1995)... a common failure item is the evaporator... leak can be checked if there's dye (pre-mixed with the freon) showing up in the water drained underneath the car. Hope that's not the problem on your car as the fix -- replacing the evaporator -- is quite expensive, 15 hours labour plus parts.

A search thru the forum here should turn up a lot more info.